Canada oil company Lightstream says risk of mid-June debt default

CALGARY, Alberta May 2 (Reuters) - Canadian oil and gas
producer Lightstream Resources warned on Monday it
could fail to meet a debt payment obligation due in mid-June if
it is unable to bolster its balance sheet through asset sales.

The Calgary-based company also said its borrowing base had
been cut to C$250 million ($199.52 million), giving it 90 days
to repay its credit shortfall of C$121 million or trigger a debt
default.

The 28,000-barrel-of-oil-equivalent-per-day producer is the
latest Canadian energy company to run into financial difficulty
as a result of the prolonged global crude price slump and spring
redeterminations, in which lenders reassess how much they are
willing to let oil and gas producers borrow.

Last month, Terra Energy Corp went into receivership after
its lender, Canadian Western Bank, demanded full repayment of
its debt.

In a statement, Lightstream said it was looking at a number
of strategies to bolster its balance sheet, including asset
sales and restructuring, but warned it could struggle to meet a
debt interest payment in just over six weeks' time.

"If we are unable to execute on an appropriate strategic
transaction in a timely manner, based on current commodity
prices, our funds flow from operations is not expected to be
sufficient to fund our upcoming junior debt interest payment
obligations, the first of which is due June 15, 2016," the
company said.

Lightstream, which operates mainly in the Cardium and Bakken
shale plays, said its 16-member lending syndicate cut its
borrowing base to C$250 million from C$550 million.

As the company has already used C$371 million of its credit
facility, including letters of credit, it must repay the
difference in 90 days.

Lightstream shares were last down 29 percent on the Toronto
Stock Exchange at 23 Canadian cents a share.
($1 = 1.2530 Canadian dollars)
(Editing by Peter Cooney)